Public Bill Committee

[Hugh Bayley in the Chair]

Written evidence to be reported to the House

CBT 01 Joint Memorandum submitted by the Joint Committee for the Mobility of Blind and Partially Sighted People, the Joint Committee for the Mobility of Disabled People, the Guide Dogs for the Blind Association, RADAR, National Autistic Society, Disabled Parents Network, Royal National Institute of the Blind (RNIB), Arthritis Care, Mind, Restricted Growth Association, Parkinson’s Disease Society, Community Transport Association and Spinal Injuries Association

Hugh Bayley: I remind the Committee that copies of the money resolution are available in the Room. I also remind hon. Members that adequate notice should be given of amendments. As a general rule, I do not intend to call starred amendments, including any that may be reached during an afternoon sitting. If colleagues become warm, they can remove their coats. I wish them well and hope that they have a good time discussing the Bill.

Gillian Merron: I beg to move,
That—
(1) the Committee shall (in addition to its first meeting at 10.30 a.m. on Tuesday 5th June) meet—
(a) at 4.00 p.m. on Tuesday 5th June;
(b) at 9.00 a.m. and 1.00 p.m. on Thursday 7th June;
(2) the proceedings shall be taken in the following order: Clauses 1 to 5; Schedule 1; Clauses 6 to 13; Schedules 2 and 3; Clauses 14 to 16; new Clauses; new Schedules; remaining proceedings on the Bill;
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 4.00 p.m. on Thursday 7th June.
It is a pleasure to have you presiding over our deliberations, Mr. Bayley. I look forward to the debates, when I know that you will keep us in the best of order. I welcome colleagues from both sides of the House to the Committee, and I will welcome their interest in the Bill and their contributions to our proceedings. I am sure that the best of order will be kept by our Whips.
The Bill is important to some 11 million people in the country, and I am pleased that it received a broad welcome from both sides of the House. Its principle is clear: the Concessionary Bus Travel Bill will extend the geographical scope of free off-peak bus travel for older and disabled people throughout England. It builds on the Government’s earlier work on concessionary travel. In 2001, the Government guaranteed half-fare concessionary travel off-peak services within an eligible person’s local authority area. Since April 2006, they have made such travel completely free. The Bill goes even further and will make off-peak free bus travel available anywhere in England.
We are also taking the opportunity to put in place a flexible framework that will allow changes to be made to concessionary travel arrangements in the future. Subject to funding and practical arrangements being agreed, there could be mutual recognition bus passes throughout the United Kingdom in the future. We retain the power to extend the scope of the national concession to other modes, such as trams and local rail services or to other groups of people. The Bill is an important part of the Government’s work to promote social inclusion. I am sure that all members of the Committee will continue to welcome its principles, and I hope that we can resolve any matters of disagreement or concern quickly.
The programme motion proposes that the Committee can meet twice today and similarly on Thursday. It will allow for a full and proper discussion of each part of this relatively small but important Bill. The motion was introduced in my unavoidable absence due to circumstances beyond my control, thereby proving that Ministers, despite what they think, are sometimes completely dispensable. It was agreed happily by the Programming Sub-Committee.

Hugh Bayley: The Minister was not delayed on a bus by any chance?

Gillian Merron: My absence was not caused by a bus, Mr. Bayley. I commend the motion to the Committee.

Question put and agreed to.

Ordered,
That, subject to the discretion of the Chairman, any written evidence received by the Committee shall be reported to the House for publication.—[Gillian Merron.]

Clause 1

The national concession

Paul Rowen: I beg to move amendment No. 7, in clause 1, page 1, line 19, at end insert—
‘(2A) The Secretary of State may by regulations make provision for the definition of “eligible journey” to be extended to a journey on one train, underground train, tram, ferry or community transport.’.

Hugh Bayley: With this it will be convenient to discuss the following amendments:
No. 31, in clause 1, page 1, line 19, at end insert—
‘(2A) The Secretary of State may by regulations make provision for the definition of “eligible journey” to exclude services which are primarily for the purposes of tourism.’.
No. 32, in clause 1, page 1, line 19, at end insert—
‘(2A) The Secretary of State may by regulations make provision for the definition of “eligible journey” to exclude services which have limited stops or are not primarily local services.’.
No. 15, in clause 1, page 3, line 2, at end add—
‘(12) Two years after the commencement of this Act the Secretary of State shall conduct a review of the definition of an “eligible service” and shall lay before Parliament a report setting out his findings.’.
No. 35, in clause 8, page 7, line 6, at end add—
‘(5) The Secretary of State may by order, amend section 93 of the Transport Act 1985 to require the provision of flexible alternative forms of concession, including for use on community transport.’.

Paul Rowen: Thank you, Mr. Bayley. It is a pleasure to serve under your chairmanship. Like the Minister, I welcome this Bill. It extends provision and continues what the Government started 12 months ago, when they introduced free concessionary bus fares in localities throughout England and Wales.
Amendments Nos. 7, 31, 32 and 35 seek to broaden the definition of an eligible journey. In her opening remarks, the Minister alluded to the fact that the Government may, at some future time, extend the provision. However, we would like to see that written in the Bill so that we have a clear commitment over a period of time. Also, given the fact that the Bill applies only to England and Wales and that there are different arrangements in other nations of the UK, we would like to see some clarity. In particular, we want the provision extended to trains, trams, ferries and community transport.
I will use community transport to illustrate one of the faults in the current scheme. Eighteen months ago, a bus operator in my constituency decided to withdraw a service. The passenger transport authority decided in its wisdom to put a dial-a-ride community transport scheme on that route and not another subsidised bus. That has been a source of great upset to pensioners in Deeplish. Although they can use their concessionary bus pass on a bus, there is no bus in their locality and they have to pay 50p for the community transport scheme. In our view, we should extend the provision to that service. I know that the Minister will say that passenger transport authorities and local authorities have their own resources to make that provision now, but we would like that enshrined in the Bill along with a clear Government commitment to extend free travel to those modes of transport.
On Second Reading, some hon. Members asked why the Isle of Wight is going to get some of this money when it provides no buses. If the amendment is accepted by the Government, the ferry service that goes to the Isle of Wight will be eligible for the provision.
We also want to tighten the definition of what is and is not provided. For example, at the moment we think that open-top tourist buses could be eligible. However, as they do not fall within the normal definition of public transport, we do not think that they should be included in the Bill.
We also want to see some provision made with regard to what we mean by “bus”. Clearly, the ideas of limited stock or a fast sort of coach does not come within that provision. I hope that the Minister will accept that. She has said that the Government retain the power to introduce such proposals. We would like to see a clear commitment written into the Bill to enable that to happen.

Stephen Hammond: Thank you, Mr. Bayley. It is an honour and privilege to serve under your chairmanship. As the Minister and the hon. Member for Rochdale have already said, this is a small but none the less important Bill. Like the Minister, I welcome the general cross-party consensus in support of the Bill, which was made clear on Second Reading. We are here to consider some of the nuances and, perhaps, one or two elements that can be tidied up.
The Liberal Democrat amendments have the superficial merit of exploring and tightening the definition of “eligible service”, but the problem is that they would involve a huge cost to the Exchequer of up to £300 million, considering some of the current estimates, and they have been tabled without any knowledge of demand, uptake, usage and cost. That is clearly one of the great advantages of the amendment tabled in my name and those of my hon. Friends. The Minister will have to agree that our amendment is reasonable and sensible—it would compel the Secretary of State to conduct a review of the modes of transport in the concessionary scheme two years after it commences. Given that the Minister has already said that flexibility is her watchword, I am sure that she will want to include that flexibility in the Bill.
Unlike the Liberal Democrats, we have chosen not to table amendments extending the scheme at this stage, because, as it has been made clear not only by the Minister on Second Reading but in Committee in the other place, the current projected costs are considerable. My Conservative colleagues and I want to make it clear at the earliest opportunity that we are not in the business of making unpublished spending commitments. The amendment would not allow the Minister or any of her colleagues to make that mischievous accusation against us, although, of course, we know that she would not dream of doing that. However, two years in, it will be far clearer what the costs of the scheme are, as it is currently defined, what the take-up rates are and whether an extension of the scheme might be funded and might increase the aim of aiding social inclusion.
It is clear that certain groups of disabled and elderly people would benefit from a wider application of eligible services. A great many elderly and disabled people live in rural locations in which the most effective method of providing a convenient eligible service will not be the bus—it will be provision of community transport, whether a minibus or taxi. The current scheme will allow access to concessionary fares only if the local transport authority commissions a bus service to those areas. In many cases, that will be economically unsound and environmentally irresponsible, yet those are exactly the elderly and disabled residents for whom this Bill was designed. There is a paradox, because on one hand the intention is to enable the elderly and disabled to have a better quality of life, to be socially included and to participate more fully in their communities, but, on the other hand, the funding will be allocated only to those who can have an eligible bus service, meaning that it will prevent such people from getting it.
For many elderly and disabled people who live in Sheffield, Nottingham and Manchester, for example, the best service will be not the eligible bus service, but the tram. Let us also consider those with handicaps and impairments, for whom door-to-door services would be not only medically advisable, but socially inclusive. That may also apply to those who access higher rates of disability living allowance and to autism sufferers, for instance.
Let us consider those who regard ferries as their everyday local transport. On Second Reading in the other place, much was made of journeys by ferry in Scotland. I want to pay tribute to my hon. Friend the Member for Isle of Wight (Mr. Turner), who forcefully argued that access to the benefits of this scheme for his residents would necessitate the ferry from the Isle of Wight to the mainland being included where it is absolutely necessary to access specialist medical help that is available only on the mainland. Of course, for Londoners in many cases the tube, not the bus, will be the local transport choice.
The Minister will retort that this scheme does not prevent local authorities from going further than the national scheme. She will also retort on cost. I welcome the fact that the Bill allows a continuing discretion for local authorities to offer travel concessions on other forms of transport as an enhancement of the statutory minimum. However, such local discretion will receive no national compensation, so other local services will have to be cut or local council tax will have to be increased to pay for a sensible local extension to the scheme.
Local authorities are currently under tight funding constraints and cannot be expected to absorb the costs of local discretionary extensions. Redefining eligible services to include community transport, trams, trains and ferries would enhance the access to transport and social inclusion for the elderly. That is one of the primary motives behind the Bill and a forceful argument for making it a Government responsibility.
 Lord Davies of Oldham stated that it would cost an extra £300 million to redefine eligible services to include trains, underground, trams and ferries, which is a very large sum. The noble Lord split the cost into its constituent parts. He attributed £250 million to trains, £15 million to trams, £25 million to community transport, and nothing to ferries. I concur that £15 million for trams and £25 million for community transport are large incremental sums, but out of a total cost of £1 billion, which the Government say they are providing, an extra £40 million, after a proper review, consultation and consideration, might be viewed as a sensible use of public moneys.
None of the retorts that we will hear from the Minister in a minute militate against accepting the amendment for review. They would carry weight only if the amendment were to include in the Bill a wider definition of eligible services. On the other side of the coin, in two years’ time we may need to reconsider some of the services that are currently possibly eligible. For example, such services include securing free rides on open-top buses and short coach journeys from Heathrow to Victoria. Local authorities in the areas from which the journeys commence could face enormous financial burdens. It may well be that after a  proper review we would concur that such services should be withdrawn from the definition of eligible service.
It is sensible to ensure that local authorities and the Government have the opportunity to put right any malfunctions of the concessionary scheme that become apparent after it has bedded down. It is sensible to allow the Government the opportunity to review the primary motivation of this Bill, which is currently being enacted by the tightly drawn definition. If the primary motivation of the Bill is not being served by the current definition of eligible services, then it is only right to redraw that definition. Therefore, amendment No. 15 puts in the Bill a requirement for reassessment after two years of operation. It is an entirely sensible and rational amendment, and I look forward to the Minister concurring with me.

John Leech: First, may I also welcome you to the Chair this morning, Mr. Bayley? I am sure that we will have an excellent time in Committee, and hopefully we can deal with the amendments and clauses in a speedy fashion.
May I add my support to the amendment proposed by my hon. Friend the Member for Rochdale in relation to the extension of the national concession to other modes of public transport? I want to mention two brief points. First, although free bus travel for the elderly and the disabled is very welcome, some parts of the country have introduced other modes of transport for sections of regular journeys. For example, part of the journey from New Addington to Croydon used to be on a bus, but that service has now been replaced by the Croydon Tramlink. If we do not have a free service for the elderly and disabled on that section of that route, how will those people access the free transport that they are entitled to? Secondly, the Mersey crossing forms part of journey from Birkenhead to Liverpool. Surely, there is a very strong case to suggest that those journeys should be included as part of the free scheme? 
As for other modes of transport supporting and enhancing bus services, if we do not have free services on other modes of transport, bus services will then be in direct competition with existing services, such as Metrolink in Manchester. We should really be looking at integrating the services rather than setting them up in direct competition. Surely the best option is for people to use one or the other. By including the other forms of public transport within the concessionary scheme, there would be no need for the operators of bus services to try to take passengers from the other modes of transport.
My final point concerns accessibility. Unfortunately, some areas do not have a bus service. If we do not have an alternative form of transport for local people, those in the most remote areas are likely to miss out on the free transport. In areas with bus services, those services are not necessarily accessible by certain disabled people. By including community transport and dial-a-ride utilities that provide door-to-door services, we will be making services accessible to the most vulnerable people in such areas.

Gillian Merron: I understand that hon. Members have some concerns about the existing definition of eligible services for the purpose of concessionary travel. I have been hopeful that the information provided in my letter of 23 May to you, Mr. Bayley, which was copied to members of the Committee, has assisted in providing some clarity about the existing definition.
 I made it clear on Second Reading that the Bill is about extending the geographical scope of the statutory minimum concession to guarantee that older and eligible disabled people can access important services outside their local authority boundary by bus for free. It is a major step forward and one of which I am extremely proud. It has also secured the commitment of unprecedented levels of funding from the Government. The Bill is not about extending the concession to other forms of public transport such as trains, trams, community transport and ferries at this time. However, I re-emphasise that we are not ruling out further improvements in the future. The Government certainly have an excellent track record on concessionary fares.
Amendment No. 7 proposes a regulation-making power to change the definition of “eligible journey” to allow the Secretary of State to extend the statutory concession to other modes. It would not actually extend the mandatory concession to other modes. Clause 8(1)(b) already allows the Secretary of State by order to amend part 2 of the Transport Act 2000 to extend the national concession to other modes of public passenger transport. The amendment is therefore without purpose. It would neither require anything to be done nor give us the power to do something that we cannot already do.
 In addition, under the Transport Act 1985, local authorities have the discretion to offer a range of travel concessions on other forms of public transport and many do. The Bill preserves the flexibility for local authorities to enhance the statutory minimum to reflect local priorities and circumstances. From the amendments, I detect an obvious concern about the definition of eligible services. I hope that I can reassure members of the Committee about such matters, as I believe that such worry is somewhat misplaced.
Amendment No. 31 proposes that the definition of “eligible journey” excludes services that are primarily for the purposes of tourism. Amendment No. 32 would provide powers for the definition of eligible services to exclude services that have limited stops or that are not primarily local services. I assure the Committee that the amendments are unnecessary. The power already exists under regulations made under section 146 of the Transport Act 2000 to change the definition of eligible service in response to developing requirements. The current regulations are detailed and stipulate broadly that a service must be sufficiently accessible to the public, have stops that are 15 miles apart or less and have stops that are situated at locations where they are likely to be used by the public.
 Amendment No. 15 proposes a review of the definition of eligible services after two years and a report to be laid before Parliament. I would accept the principle that policies should be properly evaluated. We will, of course, review how the national bus concession is working after implementation in April 2008, including the definition of “eligible service”. However, as I have already said, we already have the power to change the definition of “eligible service”, so I cannot see the need for such an amendment.
Amendment No. 35 would amend section 93 of the Transport Act 1985 to provide
“flexible alternative forms of concession, including for use on community transport”.
Local authorities already have powers to offer a range of concessions on all modes of public passenger transport, including travel tokens and some community transport, and many have already decided to offer those. The Government have no plans at present to extend the statutory minimum concession to other forms of public transport or community transport or to include travel tokens. Any decision to extend the national statutory entitlement would have to be fully funded.
 As I explained on Second Reading, and as Lord Davies of Oldham explained in another place, it is difficult to estimate how much it might cost to extend the scheme to other modes of transport, but we are talking about significant sums. As has been mentioned in various debates, early estimates from the Department suggest that extending the concession to rail alone would cost an extra £250 million per year, with another £15 million a year to extend it to trams and a further £25 million a year to extend it to community transport. Those costs could be a lot higher, depending on take-up. We are not currently in a position to commit further funding to concessionary travel. We need carefully to consider our spending priorities not only in this area, but overall, and I urge Opposition Members to do the same. It is about not only the availability of further resources to fund the scheme, but making the right decision. That involves fully considering the potential impacts in consultation with those involved to avoid any unintended consequences.
On community transport, for example, although there are arguments for extending concessions to dial-a-ride and other flexible services, many local authorities already do that. However, making it a mandatory requirement is a significant step and would require consideration of a number of issues. I urge Opposition Members to consider whether the sector could meet the extra demand that would be generated, what the impact would be on local bus services, particularly in rural areas, and what extra burdens—particularly administrative ones—would be placed on the voluntary sector.
As I have explained, the Government have already delivered significant improvements to the statutory minimum scheme in stages. In 2000, they introduced the first statutory minimum concession for older and disabled people—half-price, off-peak travel within local authority areas. We are now discussing the introduction of free off-peak bus travel anywhere in England from April 2008. That means that the Government will be spending around £1 billion a year on concessionary travel to improve the mobility and well-being of older and disabled people. We would not even have the luxury of talking about further extensions without the steps that the Government have already taken.
As I have indicated, older and disabled people currently qualify for a third off most rail journeys, as the Department for Transport requires train operators to participate in the senior and disabled person railcard schemes. In addition, there is a half-price coach travel scheme. Until the full impact of the introduction of the  new national bus concession has been evaluated for effectiveness and cost it would be premature to extend the scheme further. With that in mind, I hope that the hon. Member for Rochdale feels able to withdraw his amendment.

Paul Rowen: Having listened to the Minister’s views, particularly on eligible services, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Paul Rowen: I beg to move amendment No. 28, in clause 1, page 1, line 19, at end insert—
‘(2A) If a disabled person is unable to access mainstream public transport as a result of the person’s impairment the travel concession authority in England shall mark that clearly on the permit.
(2B) Where a person whose current statutory travel concession permit is marked in accordance with subsection (2A) the person shall be entitled to a waiver of the fare for a journey when using a dial a ride vehicle, community transport service, Hackney carriage vehicle or other door to door transport.
(2C) The Secretary of State shall issue guidance to travel concession authorities in England to which they shall have regard in determining for the purposes of subsection (2A) whether a disabled person needs to travel by door to door transport.
(2D) Before issuing guidance under subsection (2C), the Secretary of State shall consult—
(a) the Disabled Persons Transport Advisory Committee;
(b) associations representative of travel concession authorities; and
(c) such other persons as the Secretary of State thinks fit.’.

Hugh Bayley: With this it will be convenient to discuss the following amendments:
No. 8, in clause 1, page 2, line 11, at end insert—
‘(4A) If a disabled person requires the assistance of a companion to travel on journeys on public transport services, the travel concession authority in England other than a London authority must mark that clearly on the permit.
(4B) Where a person whose current statutory travel concession permit is marked in accordance with subsection (4A) is entitled under this section to a waiver of the fare for a journey, one companion travelling on the journey with the person (and nominated by the person as the person’s companion for that journey) is also entitled to a waiver of the fare for the journey.
(4C) The Secretary of State shall issue guidance to travel concession authorities in England to which they must have regard in determining for subsection (4A) whether a disabled person needs a companion in order to travel.’.
No. 10, in clause 1, page 2, line 11, at end insert—
‘(4A) For the purposes of this section a person whose ability to travel is impaired by a mental disorder within the meaning of section 1 of the Mental Health Act 1983 shall be considered to be a disabled person.’.
No. 9, in clause 1, page 2, line 22, leave out ‘subsection (6)’ and insert ‘subsections (4C) and (6).’.
No. 12, in clause 4, page 4, line 11, at end insert—
‘(ba) after sub-paragraph (ix) insert—
“(x) whose ability to travel is impaired by a mental disorder within the meaning of section 1 of the Mental Health Act 1983 shall be considered to be a disabled person.”’.
No. 29, in clause 6, page 5, line 41, at end insert—
‘(8C) If a disabled person is unable to access mainstream public transport as a result of their impairment the London travel concession authority shall mark that clearly on the permit.
(8D) Where a person whose current statutory travel concession permit is marked in accordance with subsection (8C) they shall be entitled to a waiver of the fare for a journey when using a dial a ride vehicle, community transport service, Hackney carriage vehicle or other door to door transport.
(8E) The Secretary of State shall issue guidance to travel concession authorities in London to which they shall have regard in determining for the purposes of subsection (8C) whether a disabled person needs to travel by door to door transport.
(8F) Before issuing guidance under subsection (8E) the Secretary of State shall consult—
(a) the Disabled Persons Transport Advisory Committee;
(b) associations representative of travel concession authorities; and
(c) such other persons as the Secretary of State thinks fit.’.
No. 27, in clause 7, page 6, line 15, at end insert —
‘(3A) After subsection (5) insert—
“(5A) If a disabled person requires the assistance of a companion to travel on journeys on public transport services, the London travel concession authority must mark that clearly on the permit.
(5B) Where a person whose current statutory travel concession permit is marked in accordance with subsection (5A) is entitled under this section to a waiver of the fare for a journey, one companion travelling on the journey with the person (and nominated by the person as the person’s companion for that journey) is also entitled to a waiver of the fare for the journey.
(5C) The Secretary of State shall issue guidance to travel concession authorities in London to which they must have regard in determining for the purposes of subsection (5A) whether a disabled person needs a companion in order to travel.
(5D) Before issuing guidance under subsection (5C) the Secretary of State shall consult—
(a) the Disabled Persons Transport Advisory Committee;
(b) associations representative of travel concession authorities; and
(c) such other persons as the Secretary of State thinks fit.”.’.

Paul Rowen: The previous amendments were probing amendments, but, in my view and that of my hon. Friend the Member for Manchester, Withington, these go to the heart of what is missing from the Bill. We would like the Government to implement various provisions in the amendments, particularly those relating to access for disabled people.
Amendment No. 28 would ensure that someone’s concession permit is clearly marked with the fact that they are disabled. It would also enable a person to go with them if they require a companion to accompany them. That is vital. We know that many disabled people feel anxious when using public transport. Having a companion travelling with them for free would be a valid, welcome concession for disabled people. We are not talking about huge sums. Many disabled people are not able to use a bus. This matter can be properly discussed with the Disabled Persons Transport Advisory Committee. Where there is a need for disabled people to go door to door, use of a dial-a-ride scheme is required. Extending the scheme to include those people would be valuable and useful.
The Bill does not allow someone who is mentally ill to be recognised as disabled. That is a serious omission. Under amendment No. 10, anyone classed as suffering from a mental disorder within the meaning of section 1 of the Mental Health Act 1983 would be considered as a disabled person. We are not talking about huge numbers of people or a huge extra cost involved in introducing the Bill. Nevertheless, many mentally ill people feel quite aggrieved, because they have a disability that is recognised by the medical profession, yet we are not according them the same right—because it is not a physical disability—that we are according other disabled people.

Philip Davies: I support the thrust of what the hon. Gentleman is saying. The stumbling block, potentially, is the cost of the amendments. Does he know what the likely cost of the amendments will be?

Paul Rowen: I am grateful to the hon. Gentleman. The Minister will be able to give us the up-to-date cost, but I understand, from the debate in the other place, that we are talking about £10 million out of a total budget of £1 billion. In the overall scheme of things, that is not an impossible sum to be met within the contingencies that I am sure the Minister has set aside. That could and should be done and it would be appreciated greatly by mentally ill people.
The amendments are important and deal with a serious omission and we would like to have a vote on the matter.

Stephen Hammond: Like the hon. Member for Rochdale, I am concerned about the definition of a disabled person, particularly with regard to people with mental illness. The current definitions are not adequate for the Bill. Let us consider the amendments that were tabled in the other place. When the definition of disablement was being more tightly drawn, the amendment stated in relation to mental health that it
“(g) would be defined as having a mental impairment which has a substantial and long-term adverse effect on his ability to carry out day-to-day activities in accordance with section 1 of the Disability Discrimination Act 1995 as amended, or
(h) would, if he applied for the grant of a licence to drive a motor vehicle under Part III of the Road Traffic Act 1988, have his application refused pursuant to section 92 of that Act...otherwise than on the grounds of persistent misuse of drugs or alcohol.”
That would have had the benefit of clarifying and putting into the Bill those eligible and, in particular, the difficult group of eligible people who suffer from mental health issues.
It is clear that an individual’s chance of recovery and reintegration into society would be aided by access to community health teams, mental health drop-in centres, therapy and counselling. Many such services rely on public transport and therefore access to them would be aided by concessionary travel. Eligibility for such concessionary fares could be a major contributor to mental illness recovery. Most of those who will qualify for concessionary travel and have mental health issues will do so owing to part 3 of the Road Traffic Act 1988. That Act said that there were five categories of people who should and would be refused licences were they to apply. The second category is severe mental disorder and, under that category, a number of people with mental health problems will qualify for concessionary travel, but not all.
Many people with mental health issues still hold a driving licence, even through fluctuating mental illness. Although that illness may make driving impossible at times, they will still hold a licence, but they should be entitled to concessionary travel. It is important that the definition of an eligible person is more exactly specified than it is under the Transport Act 2000. The Minister might sensibly agree to review what extra definition could be considered, particularly with regard to mental illness. I look forward to her response. I hope that she will reflect compassionately and carefully on those with mental health issues. If the Committee does not consider that it has received an adequate response, I am sure that it will want to revisit the matter.
The thrust of the Bill on Second Reading and today concerns the benefit of social inclusion. Clearly, the position of carers is an oversight. Many elderly and disabled people will only be able to use the provisions of the Bill and access public transport if their carer can do so. As it happens, many hon. Members will be taking part in activities next week, it being carers week. It will highlight the fabulous work of carers. I should welcome the Minister making positive remarks about what she might do. She has already accepted the principle of a review of eligible services. Perhaps she will now accept the principle of extending concessionary travel to carers, given their invaluable work that improves the quality of life for the elderly and disabled. I look forward to her responding positively to my comments.

Gillian Merron: I am grateful to members of the Committee for raising what I believe to be important issues. I am well aware that the intentions behind the amendments are extremely sound but, as I have explained, the Bill is about extending the geographical scope of concessionary bus travel, not extending the concession to other groups or other modes, as is envisaged by the proposals.
The Bill allows response to changing circumstances. It is premature to consider extensions when the Government are still introducing the national bus travel concession. The Transport Act 1985 provides local authorities with considerable flexibility to offer more than the statutory concession. There are numerous examples of councils that offer concessions to additional groups, such as companions of disabled people. Many councils also offer concessions to other modes, such as taxis or community transport.
 The Bill does not stop local authorities continuing to use their discretionary powers to provide enhancements to the proposed national minimum, always taking account of their local circumstances.

Paul Rowen: In the context of a national scheme, will the Minister tell us how someone travelling from one authority to another might find out whether the concession that they might have in their own authority is available in the place that they are visiting?

Gillian Merron: That will become quite clear when we talk about the cards later in the Bill. It is in the interests of the local authorities to make it clear, as they always do, that it is they who are enhancing the national scheme. I am not aware of any local authority that hides its light under a bushel. Although we are straying now, I should say that the design of the pass allows for that issue to be made clear.
 Hon. Members will know that the Government have sought to provide local authorities with more freedom and flexibility to choose how they use their resources so that they can best reflect local priorities. That approach is both welcomed and supported by local government. I hope that all hon. Members would agree that the Government have done a great deal to improve the well-being of older and disabled people who are among the most vulnerable in our society. I hope that the Committee will forgive me for reinforcing the point that from April 2008 the Government will be providing around £1 billion of funding each year for concessionary travel in England. It is a major public spending commitment of which we are rightly proud. The extension from the local to the national entitlement alone involves substantial new money of up to £250 million.
The costs associated with the amendments are significant. The money, of course, will have to come from other areas. When Opposition Members seek spending commitments, I urge them to consider the impact of that.

Philip Davies: The Minister has said that the cost of the amendments is significant, which may or may not be the case. Can she give us an indication of what the actual cost would be?

Gillian Merron: I am just about to come on to that, but I emphasise to the hon. Gentleman that it is not just a matter of cost. It is also about practicality, delivery and capacity, so I would put it in that context.
On Report in another place, Lord Davies of Oldham provided the Department’s initial estimates of the annual cost of extending the concession to companions of disabled people and to people with mental disorder, as well as providing free travel on community transport. Amendments Nos. 28 and 29 would provide free travel on door-to-door transport. The cost of community transport alone was estimated as at least £25 million a year.
Amendments Nos. 8, 9 and 27 would provide free travel for companions of disabled people, at an extra cost of some £10 million a year. Amendments Nos. 10 and 12 would extend the national concession to people with a mental impairment, at an extra cost of some £50 million a year.
Those costs are purely indicative and could be much higher depending on the eligibility definitions used, take-up, the extra concessionary travel generated, the switch from other modes, travel behaviour and the amount of additional capacity required. The existence of all those inter-related factors makes estimates of the cost very difficult. We are not ruling out extensions in the future, Mr. Bayley, although you will understand why I am not in a position to make commitments now. 
 As I said to the hon. Member for Shipley, our concerns are not confined to resources. The amendments also raise important practical and administrative points. On the issue of free travel for companions, for example, there would need to be a robust and fair system for assessing eligibility against whether a disabled person required the assistance of a companion to travel on journeys on public transport services. There could also be issues around fraud. Who would qualify as an accompanying companion? Would it be a nominated person as specified on the pass, or a considerate fellow passenger?
Providing free travel on door-to-door transport for those people who cannot access mainstream bus services, as suggested in amendments Nos. 28 and 29, again throws up a number of difficult and complex practical issues that I urge the Committee to consider seriously. For example, how would this ability to access be defined and assessed? Who would do the assessing and what would the arrangements be for appealing against such determinations? Could the community transport sector meet the extra demand generated from such a change? How would that largely voluntary sector regard the extra administrative burdens placed on it? What would be the impact on existing rural bus services?
Unless we have answers to those questions, via consultation with stakeholders and the relevant experts—in other words, those who are directly affected and concerned—the Government will not be able to accept the amendments. To do so would risk unintended consequences and higher costs to the taxpayer.

John Leech: Does the Minister accept that if she refuses to accept the amendments, some of the most vulnerable people in society will not benefit from the Bill?

Gillian Merron: As I have said, were it not for the Government’s policy and our commitment of £1 billion a year, we would not even have the luxury of discussing extensions. The Bill is about providing for some 11 million people up and down the country. I hope that the hon. Gentleman welcomes that and the fact that the Bill also allows the flexibility for local arrangements to be made to serve local communities best. I would have thought that that, too, was extremely welcome.
On the definition of disability, I welcome efforts to raise awareness of transport issues for people suffering from mental health difficulties. We are well aware of this issue, and last month officials met Mind to discuss it. Mind has indicated that it welcomes our constructive dialogue approach, which it will continue. On that basis, we are considering whether it is necessary to update the guidance to local authorities on assessing eligibility.
The hon. Member for Rochdale suggested that people with mental health difficulties could not access concessionary travel, but that is not the case. Under the Transport Act 2000 and the Greater London Authority Act 1999 there is an inclusion of those with learning disabilities, those with arrested development of the mind and those with mental health problems who would be refused a driving licence for that reason, so it is not true to say that all those with mental health difficulties are excluded.
 I recognise that all the amendments are doubtless born of good intentions, but I hope that hon. Members, having heard about what provision is already available and the implications of the amendments, no matter how well meaning they are, will agree that the Government’s approach is the right one. Our key objective for the present must be successfully to introduce the national scheme from April 2008. I therefore urge hon. Members not to press the amendments to a Division.

Paul Rowen: I have heard what the Minister has said, but unfortunately I cannot agree to withdraw the amendment. We are discussing a Bill on national concessionary bus fares, and although she may talk about things being geographical, it is important to include provision to enhance the Bill to ensure that people who would otherwise not benefit from it are able to do so. Extending the provision and broadening the definition of mental impairment would considerably benefit more people.

Gillian Merron: It might be help the Committee if the hon. Gentleman would say exactly who would be covered by this amendment.

Paul Rowen: First, I have referred to those people covered under section 1 of the Mental Health Act 1983; it is broader than what we are currently providing for. Secondly, we need to provide for people who are not able to access a bus or who need a companion. The ability for someone to take a companion with them, where necessary, is an important concession, which we would like to be provided.

Tom Levitt: On companions, when two people travel on a bus and one of them gets a free pass, they both, in effect, travel at half price. That could be regarded as a concession. I intervened to ask about the disability discrimination legislation, which excludes some people with disabilities, such as those with short-term disabilities, from the definition of disabled. Is the hon. Gentleman saying that we should go back and reconsider those definitions? That would be well outside the scope of the Bill.

Paul Rowen: I refer the hon. Gentleman to amendment No. 28. Proposed new subsection (2A) makes it clear that before the guidance is issued, the Secretary of State would consult with the Disabled Persons Transport Advisory Committee and other persons as he sees fit. I believe that that would enable his suggestions to be implemented. I am not suggesting that everything is decided now, but it is important that before the Bill is fully operational—

Gillian Merron: For the benefit of the Committee, I bring the hon. Gentleman back to his reference to section 1 of the Mental Health Act 1983. Perhaps he will address the point that the amendment radically broadens eligibility by removing the condition that mental illness is severe. In addition, perhaps he will advise the Committee how his amendment would be affected by the Mental Health Bill, which is currently before the House and which will amend the 1983 Act.

Paul Rowen: I understand what the Minister is saying. At the moment, however, the 1983 Act governs whether someone is classed as mentally ill. The amendment does broaden and extend the definition, which is what we would like to happen. I do not believe that the provision should apply only to someone who is classed as severely mentally ill, as she is suggesting. We should ensure that as many people as possible can use the concession.

Stephen Hammond: In supporting the hon. Gentleman’s initial thrust, I was looking to the Minister to reassure us about the definition of mental health. Did the hon. Gentleman not take some reassurance, as I did, from the fact that there is an ongoing conversation with Mind, and particularly from the Minister’s stated willingness to come back for review at a sensible time? If Mind, the clear specialist in the field, is prepared to engage in that conversation, I take considerable confidence from that.

Paul Rowen: I understand what the hon. Gentleman says, and I welcome the Minister’s assurances that there are ongoing discussions. I hope that, even if the amendment is not accepted, she will come forward in the future with some improved guidance. Nevertheless, I feel that the amendments would make effective changes now.

Tom Levitt: I hope that there are no spies from the Department for Work and Pensions listening to the debate, because many people receive disability living allowance, which might contain a mobility component. That money helps many disabled people with the cost of transport. If we draw too much attention to the issue, someone might make a point somewhere else that there would be a good argument for reducing DLA or leaving it at its current level, rather than increasing it. Does the hon. Gentleman therefore agree with me that it is probably better to drop the issue, so as not to draw it to the attention of the DWP and risk taking money out of disabled people’s pockets?

Paul Rowen: No, I do not agree with that. We are here to deal with the Concessionary Bus Travel Bill and to consider how that might operate for the people affected. These small amendments would broaden the scope of the legislation, and they should be accepted.

Question put, That the amendment be made:—

The Committee divided: Ayes 2, Noes 9.

Question accordingly negatived.

Paul Rowen: I beg to move amendment No. 11, in clause 1, page 2, line 11, at end insert—
 ‘(4A) The Secretary of State may by regulations make provision for persons aged 17 years and under and those in full time education to be entitled to the concession specified in subsection (1).’.
The amendment would extend the provisions in clause 1 to people aged 17 years or under, or those in full-time education. Before anyone rushes to say that I am making yet another spending commitment, I point out that it would simply give permission for the Secretary of State to make regulation. It would not introduce such measures with immediate effect. We want proper provision made so that at some future date, as resources allow, the Bill can be extended to young people and those in full-time education. I hope that the Minister will recognise that the amendment would not bring about anything that was a major revolution. We just want to ensure that young people and those in full-time education are not forgotten in respect of concessionary bus fares.

Stephen Hammond: I hear what the hon. Gentleman said about regulation. However, the amendment would be a major extension of the Bill. We tabled earlier amendments to test eligible services and the definition of disability, but this amendment would go way beyond the original thrust of the Bill. By giving the reserve power to extend, we would wander into the area of at least doubling the cost of the Bill’s provisions. There is already flexibility at local level, as we have seen in London, for concessions to be given to those in full-time education or those under 16. Even by giving the Secretary of State the power to change matters by regulation later, we would extend the principle of the Bill well beyond what we discussed earlier and, secondly, the cost implications would require a substantive Bill in itself. I am troubled by the amendment.

Gillian Merron: Amendment No. 11 provides that the Secretary of State may by order extend the national concession to people aged 17 years and under, and those in full-time education. As I said earlier, the Transport Act 1985 provides local authorities with the discretion to offer more than the statutory concession to their residents. Indeed, many authorities already go further than the statutory minimum and there is free travel for young people in a number of areas. There is no reason why the costs of any discretionary enhancements should affect the provision of statutory entitlement. The funding is separate. Central Government are providing funding for the national concession, whereas local extensions are to be decided and funded locally, in line with an authority’s overall financial priorities. However, in terms of national extensions to the concession, hon. Members will be pleased to hear that I am fully behind the principle of flexibility in the Bill, giving the Secretary of State the power to respond to changing circumstances in future. That provision runs through the Bill and it already allows the Secretary of State to make the extensions that hon. Members opposing the amendment envisage.
 Clause 8(1)(a) allows the Secretary of State, by order, to amend the Transport Act 2000 and the Greater London Authority Act 1999 to extend the national concession to other groups of people. The particular groups who can be added are set out in the Transport Act 1985. Those are the same groups to whom local authorities can choose to offer additional concessions using their existing discretionary powers. Maintaining a consistent set of clearly defined groups of people helps to avoid confusion about eligibility. I can confirm that the groups set out in the 1985 Act currently include people aged 16 or under and people aged 17 or 18 who are in full time education. In addition, the Secretary of State may, by order, amend the 1985 Act in future to include further groups of people, such as students.
As I have said, I am in favour of a flexible legislative framework, but it would nevertheless be prudent—if I might borrow the word—to touch on costs. The cost of making young people aged 5 to 18 eligible for the national concession has been conservatively estimated at the considerable sum of £500 million plus a year. As with other extensions, the actual cost could be much higher than the estimate, depending on factors such as take-up, travel behaviour and the amount of additional capacity required.
Although the hon. Member for Rochdale said that his amendment was not seeking such provision, that is perhaps not the case. One should consider spending commitments. It may be appropriate for Opposition Members to indicate whether they would be prepared to stand by their commitments.

Tom Levitt: Does my hon. Friend the Minister detect, as I do, a trend among the Liberal amendments not only to make free bus travel available to absolutely everybody—the only group that they would currently exclude is the one that is statistically least likely to use buses—but to make it compulsory?

Gillian Merron: My hon. Friend, as always, puts it so eloquently. I could not improve on his detection skills.
We are not ruling out extensions in future, although as I am sure hon. Members will understand that I am not in a position to make unfunded and difficult-to-deliver commitments now. I hope that hon. Members will recognise that existing legislation already goes further than their amendment envisages. On that basis, I hope that the hon. Member for Rochdale feels able to ask leave to withdraw the amendment.

Paul Rowen: I welcome the Minister’s commitment that there is scope within the Bill for our suggestions. She may recall that, when the local scheme was introduced, the funding that went to the local authorities did not always match the need. One major change in Tyne and Wear was the doubling of the cost of travel for students. I hope that, when this scheme is considered, further cuts are not made elsewhere to fund the national scheme because the Government have not got the funding right. I hope that the situation for young people and students is not made worse as a consequence of the power not being used. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Stephen Hammond: I beg to move amendment No. 17, in clause 1, page 2, line 17, at end insert ‘, and
(c) as is compliant with the ITSO standard, as detailed under Crown copyright in 2004.’.

Hugh Bayley: With this it will be convenient to discuss the following amendments: No. 18, in clause 1, page 3, line 2, at end add—
‘(12) The Secretary of State shall by regulations specify arrangements for the purposes of fraud prevention.
(13) Regulations under subsection (12) may include—
(a) provisions for a national database of permits;
(b) requirements for travel concession authorities to provide information about permits and permit holders; and
(c) requirements for travel concession authorities and operators to take such steps as are practicable to prevent the use of permits which are not valid.’.
No. 33, in schedule 1, page 13, line 7, at end insert—
‘(1B) The Secretary of State shall make such payments to London authorities as he considers appropriate to ensure that permits in London meet the national standard and can continue to be validated on vehicles operating on the London Bus Network.’.

Stephen Hammond: The amendment is fairly simple and helps to clarify which standard should be used as and when
“a permit issued pursuant to subsection (4)”
is issued in the form of a smartcard. The Minister has already accepted that as and when it is technically possible—perhaps at the start of operation—the permit issued for travel will be a smartcard. Like most Committee members, we are grateful to her for circulating the consultation documents about the shape and the look of the permit last week.
The amendment has a number of advantages. In the Bill as it currently stands, there is some ambiguity in the specification of the proposed national smartcards. The Bill does not specify the form that the smartcard should take. That would not be a problem were it not for the fact that a national standard in smartcard technology already exists and is known as the ITSO standard. Detailed specifications were published in 2004 under Crown copyright.
In my view, the lack of rigid specification theoretically allows the Government to deviate from the ITSO standard, which would be a senseless waste of the significant work already completed in introducing the scheme. As the Minister has already said, local authorities will continue to have input into the development of the card scheme.
I know that the Government support the implementation of smartcards of this specification and that they have been working to develop the scheme. Therefore, formalising that intention is important to provide clarity to the local authorities whose duty it will be to deliver that scheme on the ground. That is the import of amendment No. 17.
Amendment No. 18 goes to the heart of the concern of many organisations, local authorities and transport authorities that not enough regard has been given to fraud and fraud prevention. Permits that contain photographs and security devices are important, and a first step. They will prevent the casual, opportunist fraudster, but they will do little to deter organised and illegal use.
Concessions are already in use in London. London authorities have worked hard to reduce and to prevent fraudulent use. For example, Oyster card technology allows a card that is reported lost or stolen to be switched off immediately. The amendment aims to enable travel concession authorities across the country to prevent fraud.
The Minister would be required to specify that a national database of cards be set up and maintained. The ITSO technology would then allow lost or stolen cards to be disabled. Unless that happens, there is no way of knowing whether the cards that are being used are stolen or fakes. Given the extension of the scheme, the potential for fraudulent use beyond the locality of a principal or sole residence is massively increased. The only way to prevent such fraudulent usage is the maintenance of a national database and a current hot list of lost and stolen cards.
For the national list to be effective, each travel concession area must provide information, which would be protected by the Data Protection Act 1998 and only used on a need-to-know and access basis. It therefore follows that each travel concession area would be required to maintain and supply a list of basic details. The cost of that would be minimal, if anything, as all the information will be necessary and will have to be offered as proof of eligibility for the concessionary travel permit.
London councils have raised a particular concern with regard to fraud. The freedom pass is used in conjunction with a separate photo identity card. Most of those are issued at post offices, which is popular and convenient for the elderly. However, the new national standard permit will contain an embossed photograph, which means that the post office will no longer be able to issue it. Application forms will have to be sent away. Not only will that increase costs, but it will increase the chance of fraudulent use and application. Amendment No. 18 would require the Minister to consider fraudulent applications and use, and to specify arrangements for prevention by travel concession authorities. The cost indications are minimal, yet the protection offered to the public and the concession authorities would be substantial.

Paul Rowen: I support the amendments tabled by the hon. Gentleman, particularly amendments Nos. 17 and 18. I want to speak about amendment No. 33, which is tabled in my name. Local authorities and passenger transport authorities operate a variety of schemes, and if we have a national scheme it is important that we have a common technology and a common modus operandi. Specifying the ITSO standard in the Bill is, in our view, an important step in ensuring that we have a genuinely national scheme.
Amendment No. 18 deals with fraud prevention. Like the hon. Gentleman, I believe that the Government’s proposal of an embossed photograph will not be convenient for elderly people. Although it is not ITSO compliant, the scheme as it operates in London at the moment is an excellent example of a scheme that is convenient to use but has a database that enables fraud to be reduced. The fact that the photo ID can be obtained at a post office is convenient for many people. The scheme that the Government propose would not enable that to happen, as the application would have to be sent away and people would have to wait. The Oyster card can be obtained at a variety of local outlets and because the database is a national one, if the Oyster card is stolen, it can be switched off and cannot be used.
In moving forward, we need some common agreed standards. There needs to be a national database to ensure that cards issued in one area cannot be used elsewhere if they are stolen. An ITSO standard, a national database and ensuring that the relevant authorities work together will allow us to ensure that that happens.
My amendment deals in particular with the effect in London. Although the Government have agreed that people can continue to use their existing cards in London until 2010, that is merely moving the problem forward. The machines that are used by Transport for London are not ITSO compliant. They will all have to be replaced and a new system will have to be put in place. Clearly, there is an additional cost in that. Amendment No. 33 would make the Government sit down with Transport for London and the London boroughs to agree a way forward to ensure that the London scheme, which is better than that which operates elsewhere in the country, is ITSO compliant and that the additional costs are not all borne by Transport for London or the London boroughs. That is important, and we need to ensure that the excellent scheme that operates in London continues. However, there is a way forward that is agreed by discussion, so I hope that the Minister will support the amendment.

Gillian Merron: This group of amendments is linked to the issuing of passes. It deals with three specific issues: requiring that all passes are ITSO smartcards; specifying arrangements for fraud prevention, and ensuring adequate funding for London to issue passes. I will deal with each amendment in turn to ensure that I address fully the separate but interrelated issues that they raise.
First, amendment No. 17 recommends that we should make the pass an ITSO-compliant smartcard. This is not the first time that such an amendment has been debated. Speaking on behalf of the Government, Lord Davies addressed the point on several occasions in the other place. It is difficult to see how we can state more clearly the fact that although we absolutely agree with the intention of the amendment, which is to encourage the increase of smart ticketing, we fundamentally disagree that putting an obligation in the Bill is the practical or sensible way to achieve what we all agree would be a desired outcome.
I have stated many times our commitment to smart ticketing and to the ITSO specification, which we see as vital to ensuring the interoperability of smartcards throughout the country. We recently published a consultation document, to which the hon. Member for Wimbledon referred and which Committee members were in receipt of last week, that clearly sets out that our preferred option for the specification of passes is for them to be ITSO-compliant smartcards. However, it is wholly unnecessary to have such a requirement in the Bill. Proposed new section 145A(5) of the Transport Act 2000 provides for the specification of the permit in regulations. As I have already indicated, our preferred option is to use that power to specify that passes will be ITSO-compliant smartcards.
 Primary legislation is an inappropriate place to address such technical issues. Regulations are the appropriate place to deal with such matters, and that is where we intend to deal with them. There are still practical and technical matters that need to be fully considered before we can specify the necessary requirements. Furthermore, we must consider the implications of specifying the requirements of the passes in primary legislation. Even the most minor of changes, such as the change of the name ITSO, would require amendments to primary legislation. I am sure that that cannot be the intention of the hon. Member for Wimbledon.
Amendment No. 18 proposes that the Secretary of State be required to specify in regulations arrangements for fraud prevention. Again, I cannot agree with that suggestion. Fraud prevention is, without any doubt, an important part of a workable scheme. We also believe that smart ticketing will do much to prevent fraud, as we have already seen in those areas where it has been implemented. Issuing smartcards already requires the creation of a database containing details of cards that have been issued to concessionaires. Smart ticketing brings with it the ability to deactivate cards reported as lost or stolen. A lot of technical work is being undertaken to lay the foundations for interoperable smart ticketing in England, and indeed the UK generally. An effective method of hot-listing lost and stolen cards is an important part of that work.
Since the national concession will continue to be administered at a local level from April 2008, the most effective solution to fraud lies in ensuring effective communication at a local level, rather than introducing another national level of bureaucracy, which will further complicate matters. The issue of how to combat fraud effectively is one that we visited many times during the development of our proposals. The concessionary fares working group and the operations and technology sub-group, both of which contain representatives of travel concession authorities and operators, have debated at considerable length the most effective fraud prevention measures, including in areas that will not have smart ticketing from April 2008. The matter is also covered in our consultation document.
Travel concession authorities and operators clearly share our strong motivation to minimise fraud, since fraudulent travel has serious financial implications for both parties, as well as for the Government. We therefore do not believe that it is necessary or desirable to specify fraud reduction arrangements in regulations; rather, practical, workable solutions should be developed by those who are best placed to do so.
Amendment No. 33 appears to be intended to ensure that London authorities receive the funding necessary to issue cards to the national specification, and to ensure that they can be used as smartcards on London buses. Although the amendment as drafted relates to the provisions dealing with the reserve free travel scheme, I assume that it is intended to apply generally, and not just in those circumstances. Again, I understand the motivation for such an amendment, but can assure hon. Members that it is entirely unnecessary. The Secretary of State already has the power, and has stated his intention, to make appropriate payments to ensure that passes in London—indeed, in all of England—meet the national standard.
The Government have continually stated their commitment to funding new burdens that are imposed on local authorities—I am happy to restate that commitment. We recognise that the issuing of passes to a national standard represents a new burden and have repeatedly stated that it is our intention to pay a grant to cover all reasonable new cost burdens associated with the issuing of passes. The power to pay such a grant exists under section 31 of the Local Government Act 2003. As I have said, and as is set out in the recent consultation paper that is available to all Committee members, we recognise the unique situation of London and have taken account of that in our planning.
It is neither cost-effective nor practical to require London to issue ITSO-compliant smartcards forApril 2008. That is why we are proposing that existing freedom passes will be re-stickered with the national logo for April 2008, so that bus drivers throughout England will recognise a Londoner’s entitlement to concessionary bus travel.
 Our proposals state that concessionary travel passes in London must meet the national standards fromApril 2010. However, we recognise that issuing cards to the national standard in 2010 will represent a new burden to London and we have stated that we fully intend to pay a grant to cover it. We also fully realise the need for a migration strategy for London. The intention of specifying that passes must be ITSO-compliant smartcards is to lay the foundations for interoperable smart ticketing for all of England and, ultimately, the UK. London is, of course, a vital part of that.
 To reassure hon. Members, in May 2006, the Mayor of London and the Secretary of State for Transport agreed that the Oyster network would be made interoperable with ITSO smartcards. A technical solution to achieve that is under development. We are involved in a continuing dialogue with London councils and the Local Government Association to determine the nature of the new burdens that will be borne by London and the most appropriate basis on which to pay the grant. The way in which the amendment is drafted suggests that the Secretary of State would make such payments only under the reserve free travel scheme. I assure the Committee that we intend to pay a grant to cover London’s new burdens whether or not the free travel scheme is in operation.
In summary, I trust that I have demonstrated clearly that the amendments, despite being tabled with the best of intentions, would not achieve their aims of promoting the spread of smart ticketing or of ensuring that a workable system is in place for April 2008. On that basis, I hope that hon. Members will not press the amendments to a Division.

Stephen Hammond: I am grateful for the Minister’s reassurance, particularly on amendment No. 18 and the discussions that are taking place about fraud prevention. On amendment No. 17, Ministers often say that regulations are the most appropriate method of dealing with things. Far too often, Ministers do not want to include things in Bills, but I accept her contention that were the amendment to be accepted, it might require primary legislation if the name of ITSO were changed. Although, if I am lucky, I may bring it back on Report, on that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Stephen Hammond: I do not propose to detain the Committee for long, particularly as we have had a chance to debate in detail a number of aspects of the clause. The substance of the clause provides for any qualifying England-resident pass-holder to receive concessionary travel on an eligible journey on an eligible service. We have gone into some depth about eligibility and who would qualify.
However, subsection (8) allows the Secretary of State to issue guidance about what constitutes sole or principal residence, and it is intended to provide a consistent approach. The guidance will be issued should the Secretary of State so desire. Surely the Secretary of State should issue the guidance before the enactment of the Bill if the consistency that is explained in the explanatory notes is to be achieved. For instance, if an elderly person has two residences in a town and a coastal resort, which is the principal residence? Under previous council tax regulations, it might have been clearer, but will it be the capital gains tax principal residence, where they spend most time, or where they have their driving licence or passport registered? All may be different.
Subsection (4) includes the phrase,
“appears to the authority...whose sole or principal residence is in the authority’s area”,
which, again, is ambiguous and open to interpretation. Will the Minister clarify the Secretary of State’s intentions? If she cannot reassure us today, perhaps we can return to the issue on Report.

Gillian Merron: I am glad to speak to this clause stand part debate. Under section 145 of the Transport Act 2000, an eligible person is restricted to free off-peak local bus travel within their local authority area. The clause changes the provisions affecting England and enables eligible England residents on production of a travel concession permit to travel free on off-peak local bus services on journeys beginning anywhere in England other than on the London bus network. The national concession is secured on journeys beginning on the London bus network under changes that clause 6 makes to the Greater London Authority Act 1999.
As now, people aged 60 and over and disabled people will be eligible. The definition of travel concession permit now includes passes issued to eligible London residents, so that for the first time Londoners will be able to benefit from the concession outside London. I am sure that hon. Members who represent constituencies outside London will look forward to welcoming Londoners who use their bus travel passes.
The definition of “eligible journey” in new section 145A(2) of the 2000 Act will mean that operators of eligible services within London but not beginning on the London bus network—that is, eligible London permit services—must for the first time offer the concession. Currently, operators of those services are not required to offer any concession, although some may do so voluntarily.
 Hon. Members will be aware that a travel concession authority must issue permits to elderly and disabled people “residing” in its area, which is a point that the hon. Member for Wimbledon raised. New section 145A(4) secures the provision that a travel concession authority outside London must issue permits to elderly and disabled people whose “sole or principal residence” is in its area. I can confirm to him that following consultation with local authorities, we fully intend to offer guidance to assist local authorities in that regard.
The change is made to promote a more consistent approach to pass issuing throughout the country. New section 145A(5) secures a power for the Secretary of State to make regulations about what a permit issued outside London will look like. The provision is again to ensure that the appearance of cards throughout the country can be standardised in an agreed form that bus drivers easily recognise.
Regulations can also be used to require the introduction of smartcards. The provision mirrors a power in relation to passes issued to London residents under the Greater London Authority Act 1999. The provisions of section 145 of the Transport Act 2000, relating to Wales, have been restated as newsection 145B, which is referenced in schedule 2 to the Bill.
 As before, a person can give up the national concession in exchange for other concessionary travel benefits offered by their local authority, such as travel tokens, although to avoid confusion it has been clarified that that can be done only if the same body administers both schemes. I am glad to move that the clause stand part of the Bill, which I believe takes us forward in our wish to extend the concessionary fares scheme.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Clause 2

The national concession: supplementary

Question proposed, That the clause stand part of the Bill.

Stephen Hammond: The purpose of clause 2 is to amend the definition of the travel concession authority as defined by section 146 of the Transport Act 2000. Currently, the definition includes non-metropolitan district councils, county councils and passenger transport executives, but the clause will extend it to the London authority and the Isles of Scilly. So far, so good. However, there are no eligible services on the Isles of Scilly. The intent behind the clause is that eligible residents of the Isles of Scilly could access eligible services on the United Kingdom mainland.
That raises two questions for the Minister. There are no eligible services on the Isles of Scilly and access to those services on the mainland is desirable, but residents need to get to the mainland. As we explored in our discussions on the previous clause, what is the rationale behind excluding from the Bill services that allow access to eligible services? The same point was raised in regard to residents of the Isle of Wight. I look forward to her explanation.
Furthermore, she has claimed several times that £250 million is being made available to implement the scheme, but several documents published by the Department have stated that figure followed, in brackets, by “£212 million for England”. The difference is £38 million. Will she confirm how much of that £38 million is for the concession to the residents of the Isles of Scilly?

Paul Rowen: I am grateful for the opportunity to speak on the clause and to ask the Minister about the paragraph concerning the Isles of Scilly. I am sure that she is aware that under equivalent legislation operating in Scotland, if someone is travelling from, say, the Shetland Isles to the mainland, the ferry journey is eligible, which allows them to access bus journeys on the mainland. The Bill does not provide for a similar extension of services for residents of, for example, the Isles of Scilly, where there are no bus services. Clearly, they cannot use their concessionary bus passes on the ferry. I hope that she accepts that a concession similar to that granted in Scotland, under which people can use ferries to get to buses, might offer a welcome extension for residents of places such as the Isles of Scilly.

Gillian Merron: Although it is true that there are no eligible services on the Isles of Scilly, the addition, in subsection (3), of the Council of the Isles of Scilly as a travel concession authority will require the council to issue passes to their residents for use on the mainland, under new section 145A(4). That will ensure that elderly and disabled residents of the Isles of Scilly can, on production of their passes, like everybody else, travel for free on off-peak local bus services anywhere in England. The Council of the Isles of Scilly is at liberty to make arrangements with a mainland council, such as Cornwall county council, to issue passes to residents on its behalf. It might be worth pointing out that we will deal with issues concerning the Isles of Scilly when we come on to amendments Nos. 3, 4 and 5 and new clause 1.
The hon. Member for Wimbledon raised questions about the Isles of Scilly. The amount that they would get will depend on the basis of distribution, which is not yet finalised. We will be consulting on that and, indeed, later in our proceedings, we will discuss funding arrangements.

Stephen Hammond: Is the Minister accepting that the £38 million does not apply to the Isles of Scilly?

Gillian Merron: I am happy to get back to the hon. Gentleman on that very point when it becomes clear.
I refer also to the inclusion in the clause of London authorities as travel concession authorities, which means that such authorities will reimburse operators of eligible London service permit routes, of which there are about 30, so that they can accept concessionary passes for the first time. They will also have a role in enforcement. They will not have to issue passes to London residents, as the legislation will allow freedom passes to be used. London Councils can perform the functions in question on behalf of the London authorities, as they do for the reimbursement of Transport for London.
In answer to the question that the hon. Member for Wimbledon asked about the Isles of Scilly and the sum of £38 million, I am happy to inform him and the Committee that inspiration has struck me: of the total of £250 million, £38 million goes to devolved administration, leaving £212 million for the English authorities. If the hon. Gentleman would like any further information, I should be happy to provide that.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.

Clause 3

Reimbursement of operators

Stephen Hammond: I beg to move amendment No. 16, in clause 3, page 3, line 25, at end insert—
‘(2A) Two years after the commencement of this Act the Secretary of State shall conduct a review into the reimbursement of operators by travel concession authorities and shall lay before Parliament a report setting out his findings.’.
The amendment is in our opinion another entirely sensible one. It is far from clear that operators will receive the correct reimbursement. The experience of the 2006 concessionary scheme has shown considerable disagreement arising in a number of areas between local authorities and bus operators about the level of reimbursement for carrying concessionary fares. The Government have stipulated that reimbursement should be on a no better off, no worse off basis. Yet there is some dispute about what exactly that should mean. The Transport and General Workers Union, for instance, has already said that it thinks that the concessionary scheme has provided a source of subsidy for already profitable bus operators. However, the 60-odd appeals by operators to the Secretary of State over the reimbursement arrangements would suggest otherwise.
It is, of course, from the very profits that bus operators make that reinvestment is made in new upgraded vehicles. The evidence for that is clearly that the average age of buses on the street has fallen by more than a third since deregulation. Several bus companies claim that the compensation that they receive from the travel authorities for operating concessionary fare schemes does not cover the full operating cost, and takes no account of depreciation or capital costs. They argue, further, that in all too many cases their recompense is given, not negotiated. Hence the appeal procedure.
Reimbursement on a no better off, no worse off basis is in reality an extremely difficult balance to achieve. After all, the marginal cost to an operator of carrying a few extra passengers is virtually nil. One could almost make a case for saying that for carrying one extra passenger on a concessionary fare, the operator would need no reimbursement. However, when, as is likely under the Bill, numbers are likely to reach the point at which extra vehicles must be bought and extra drivers hired, the cost becomes considerable. At that point,  should not the authority be responsible for not only the operating costs but the extra capital costs?
A review of the systems put in place by travel concession authorities after two years of operation would allow the Government to establish whether costs were being borne fairly between authorities and operators. That would further enable the Government to establish best practice and to advise travel concession authorities on how to improve efficiency and to achieve savings. It would allow the Government to re-examine the no better off, no worse off approach, to consider the capital costs element, and to ensure that operators apply best practice in their delivery of their service to the concessionary passenger. It would also allow an examination of procedures, and reassessment of the concessionary fare reimbursement levels.
The 2008 scheme will involve many variables and unknowns. There is unlikely to be a perfect forecast of the levels of reimbursement necessary to operators. Therefore, a review after two years of operation is not only desirable, but essential if the Bill is to be seen as fair and equitable to both providers and operators.

John Leech: We are happy to support the amendment. It is vital to ensure that the system of payments to operators works effectively. The added complication of widening it to a national scheme will no doubt make it more complicated. Ultimately, we want to see the swift implementation of a smartcard system that allows direct payments to operators, so that no local authority is better or worse off under the payments scheme.
When we reach the next amendment, I am sure that the hon. Member for Tyne Bridge will explain how the existing scheme has caused Tyne and Wear PTA serious trouble. We therefore need a review after two years, but we also need to look at a smartcard system in the longer term to ensure that payments for every single journey go directly to the operators.

Gillian Merron: The amendment proposes that, two years after the commencement of the Act, a review be carried out of the reimbursement of operators by local authorities. Of course, I accept the principle that policies should be properly evaluated, and we will naturally review how the national bus concession is working after implementation in April 2008. However, the amendment looks at just one particular aspect and is not necessary.
 There is already a procedure in place by which operators can appeal to the Secretary of State if they consider that they are being unfairly reimbursed for carrying concessionaires. Any formal review of reimbursement arrangements would conclude that a wide variety of such arrangements was in place, and that would reflect the different discretionary concessions and local circumstances around the country. I therefore see no real need for the amendment.
Under existing arrangements, authorities must balance their desire to secure value for money from their dealings with operators against the risk of appeal should their arrangements leave operators worse off. Although there is inevitable variety in the way in which those principles are applied, they remain the most appropriate and fair. Indeed, we have already set up a reimbursement task group involving local authorities and bus operators to look at improving the existing process.
The hon. Member for Wimbledon asked for an explanation of what “no better, no worse off” meant. Let me add to the points that I have made by saying that it is about taking account of the fares that would have been received, plus any extra costs from carrying new eligible passengers. That refers to both capital and revenue.

Stephen Hammond: I am grateful for that explanation, but I did not actually ask about that. I said that we accepted that principle, but that it was an extremely difficult balance to achieve.

Gillian Merron: I note the hon. Gentleman’s comments. If he has any suggestions about how we might improve things, I would be delighted to hear them in Committee or outside.

Stephen Hammond: I am sure that we will have a chance to bring them forward in two years’ time.

Gillian Merron: There is no need to wait two years—my invitation can be taken up now.
With those comments, I hope that the hon. Gentleman will agree that the amendment is unnecessary and will duly withdraw it.

Stephen Hammond: I have listened carefully to the Minister and I take some comfort from her reassurance on the matter. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

David Clelland: I beg to move amendment No. 20, in clause 3, page 3, line 25, at end insert—
‘(2A) After subsection (1) (as substituted by subsection (2) above) insert—
“(1A) The Secretary of State shall provide to each travel concession authority in England by means of a direct annual revenue grant sufficient funding for the authority to comply with its obligation to reimburse operators under subsection (1).”.’.

Hugh Bayley: With this it will be convenient to discuss the following: amendment No. 6, in clause 9, page 7, line 28, at end insert—
‘(aa) enabling the Secretary of State to reimburse travel concession authorities where they incur a deficit of over £500,000 as a result of reimbursing individual operators under this Act.’.
New clause 2—Reimbursement of travel concession authorities—
‘After section 149 of the 2000 Act (Reimbursement of operators) insert—
“149A Reimbursement of travel concession authorities
(1) Where a travel concession authority has responsibility for the administration of mandatory travel concessions under section 145A, including the administration and issuing of permits under section 145A(4) and the reimbursement of operators under section 149, the Secretary of State shall reimburse the authority the full costs of administering mandatory travel concessions by means of a direct annual revenue grant.
(2) The Secretary of State shall reserve a proportion of the funding allocated to the mandatory travel concession scheme to provide a contingency fund.
(3) A contingency fund under subsection (2) shall be used to reimburse any travel concession authority for any unforeseen capital and set up costs incurred by that authority in introducing a scheme to comply with this section.”’.
 New clause 4—Review of reimbursement arrangements—
‘Two years after the commencement of this Act the Secretary of State shall conduct a review of arrangements for allocating funding to local authorities necessary for the reimbursement of operators under section 3(2) of this Act, and shall lay before Parliament a report setting out his findings.’.
New clause 5—Funding statement—
‘At the end of each financial year after the commencement of this Act the Secretary of State shall make a statement to Parliament setting out—
(a) the total sum of funds made available to local authorities for the purposes of providing bus services and concessionary fares thereon in the financial year just ended, and
(b) the method by which those funds have been made available.’.

David Clelland: As a former Government Whip and a loyal supporter of the Government, for the most part, I regret the necessity to table amendments to a Government Bill. However, as has been suggested, particular problems in Tyne and Wear are not dealt with under the Bill, so I make no apologies for taking a little time to refer to them and to suggest some possible solutions.
At the time of the Chancellor’s announcement of free off-peak bus travel after 9.30 am for pensioners and disabled people on local buses only, Tyne and Wear had a half-price travel system for pensioners and disabled people on buses to a maximum of 50p after 9 am; a 50p fare on Tyne and Wear Metro, the Tyne ferry and Northern Rail, and concessions for children and students. It was a popular and well used system. Indeed, the concessionary travel take-up by the elderly alone amounted to some 75 per cent. of eligible riders. It is the largest outside of London, which is 80 per cent. and way above the average in England of 49 per cent.

John Leech: Will the hon. Gentleman explain what impact that had on actual bus and Metro ridership? Did it boost the figures considerably, or not have a noticeable effect?

David Clelland: I am not sure that I get the gist of the hon. Gentleman’s question. Did what have a noticeable effect?

John Leech: I apologise. I did not make myself clear. Did the implementation by Tyne and Wear passenger transport authority of the extra concessions have an impact on the number of users of the bus services?

David Clelland: Yes, indeed, and the welcome new move forward will have a similar effect on ridership. Some 36 million bus journeys a year are subsidised under the current scheme in Tyne and Wear. It was estimated after the Chancellor’s announcement that the additional cost to the Tyne and Wear passenger transport executive of free local travel would be £20 million a year. The Minister said that the Bill applies only to buses and not to other modes of transport, but matters are not quite that simple.
In Tyne and Wear, we have the publicly owned and run Metro system. At the time, it had a charge of 50p to the eligible concessionary travellers. If we had left it as it was, it would have meant that buses would be free, but that it would cost 50p to travel on the Metro. That would have had two effects: first, it would be unfair to those who rely heavily on the Metro to travel from the east end of Newcastle into the centre. They would have had to pay, as opposed to people in the west end of Newcastle where there is no Metro who would have had free bus services. That could not be tolerated.
Secondly, such a system would have had a detrimental effect on the Metro itself. If there were a charge to travel on the Metro, but buses were free, people would obviously be tempted to move their mode of travel from the Metro to buses. Bus operators would be tempted to compete with the Metro, and they would be receiving the benefit of the additional public subsidy, while the Metro system would suffer from the loss of ridership, something that a Labour Government would not want to encourage.
On 28 November 2005, my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck), then a Minister at the Department for Transport, wrote to hon. Members saying that
“we are providing an extra £350 million”
to finance the scheme. “We” was used rather riskily because it was not the Department for Transport that was providing the money. The Government were providing the money through what was then the Office of the Deputy Prime Minister, which we now know as the Department for Communities and Local Government. It was to be distributed through the revenue support grant mechanism.
By the way, there was no attempt at the time by the Department for Transport to negotiate anything in return from bus operators who were already receiving £1.3 billion a year in public subsidy. The local government revenue support grant system is not fit for the purpose of distributing the money. Calculations on the basis of population are okay for most services, but not for the particular service that we are discussing. It does not take account of the high levels of use, low car ownership and higher dependency on public transport in areas such as Tyne and Wear.
Tyne and Wear was told to expect £12.7 million from the formula grant system, which was £7.3 million short of the estimated cost of introducing the new scheme. Meetings with Ministers and civil servants were to no avail and we were told that it was impossible to correct that anomaly through the revenue support grant system. I thought that that was a rather curious argument because the education system already has a system for financing schools on the basis of bums on seats. I still do not know why we cannot have such a system for public transport. The result was that in 2006-07, £2 million had to be taken from Tyne and Wear passenger transport authority balances. There were cuts in secured bus services, which was rather bizarre as it meant that we were saying to elderly and disabled people, “There is a new free travel scheme, but the services on which you most rely—the subsidised, secured services—will have to be withdrawn in order to pay for it”. There were cuts in subsidies for students and young people, which was unpopular with elderly people, who felt that they did not want the advantage of free travel if it was at the cost of cutting travel for young people and students. Indeed, some elderly people feared that when they travelled on buses there may be some backlash from young people as a result. Thankfully, our young people are more sensible and that has not happened.
That was the situation in 2006-07. During 2007-08 there will need to be further adjustments to continue the current scheme. In total, by the time we get the national scheme in 2008, it will have cost Tyne and Wear—one of the poorest regions in the country—some £9 million to run the Government scheme up to the introduction of the national scheme.
I was one of the first people to call for a national scheme. Indeed, days after the Chancellor’s announcement, I suggested to him that the scheme should be extended nationally because the way it was being proposed at the time was nonsense. I welcome the increased flexibility, but, if the same formula for distribution is to be employed, which the Bill suggests is the case, the funding problems will remain. I still have not given up hope that some way will be found to refund Tyne and Wear the £9 million that it has lost over the past two years.

Hugh Bayley: Order. May I remind the hon. Gentleman that we are discussing amendments to future legislation and although it is quite right for him to explain what has happened in his locality in the past as an explanation of why he wishes to make the amendment, we cannot debate the financial position of his local authority in past years as part of the debate on the Bill.

David Clelland: Thank you, Mr. Bayley, for that guidance. I was just about to come on to the amendments. However, I will just say that, unless the £9 million is refunded, when the national scheme to which the amendments refer starts next year, Tyne and Wear will be starting not from a level playing field, but from a £9 million shortfall.
 I understand that in Scotland and Wales the system of funding for subsidised travel is not through local authorities, but directly from the Executive. Amendment No.20 proposes a similar system for England. It is a specific measure and the funding would be directly targeted to where it is intended, so that the full costs to the transport authorities are met. Under the current system, it is nonsense that some councils can have a surplus from the funding and use that for purposes for which it was not intended while other authorities, such as Tyne and Wear, have serious shortfalls. Amendment No. 20 would deal with that anomaly.
In the event that shortfalls do occur in future, amendment No.6 would limit the damage to local authorities. I admit that the figure of £500,000 is somewhat arbitrary and I accept that I would not get away with an amendment that said that every single penny had to be accounted for; that just would not be possible. However, £500,000 seems to be a reasonable figure. If such a measure had been enacted from the beginning, Tyne and Wear’s losses would have been £500,000 and not the £7.3 million which we had to subsidise, which would have been far more manageable. The introduction of the national scheme is welcome, but it will result in an increased take-up and a change in passenger and operator behaviour that cannot be predicted. It will mean higher costs, particularly in areas where public transport is already heavily used and where increased usage is being encouraged.
I hope that the Minister will accept that those two amendments are sensible and practical and that she agrees that they should be incorporated into the Bill. This is a Government initiative and it should be underwritten by the Government in case of any losses for the local authorities concerned.

Stephen Hammond: I listened with great interest to the hon. Gentleman. I wish to speak to new clauses 4 and 5. New clause 4 deals with the review of funding allocation arrangements, and new clause 5 seeks to have an annual statement of funding, and the method of funding, laid before Parliament. The new clauses go to the heart of what the hon. Gentleman just said, and it is important to address them in conjunction.
The provisions deal in different ways with the funding for the scheme, which is giving concern to local authorities. There are two aspects to funding: whether enough money will be available—that is, whether the quantum sum provided will be sufficient to cover the cost—and the mechanisms by which funding will be given to local transport concession authorities and thereafter to operators, and whether the mechanisms will be seen to be equitable.
New clause 5 deals with the broad aspect of funding—the quantum sum available—and how the monies will be made available. The question of whether the sum provided for the scheme will be large enough to cover costs goes to the heart of the scheme. If it is not, the scheme cannot proceed.
The annual statement is key. The Government have provided initial funding for other schemes but then after a period not provided the year-on-year increases to ensure that local authorities are properly compensated. It is likely that demand will increase under the scheme. When the local concessionary fare scheme was introduced last year, demand increased substantially. In fact, it would be fairly ridiculous if it did not. One of the reasons for providing such schemes is to facilitate access to transport. If demand did not rise, access would not be facilitated and the whole intent of the Bill would be lost. We have clear evidence that take-up is increasing, and that those who take up the scheme use the pass more frequently.
Finally, there is the issue of cost increases to the bus industry. They have consistently outstripped general inflation. Bus fares are rising above the retail prices index, and industry costs have risen some 7 to 9 per cent. per annum over the past three years. That is due not only to fuel costs but in part to extra costs imposed by the EU and by health and safety regulations.
The need for a statement on the method of delivery of funds is also key. The proposed scheme has ramifications for the method of delivery in all areas. In some specific cases, extra provision needs to be made. The proposed system for reimbursement is via the local authority block grant to district and unitary councils. The first problem is that those councils are not in all cases the travel authority. There is no requirement or guarantee that the district or unitary authorities will pass on the sums that they receive to the travel authority. Secondly, the block grant is a relatively crude instrument. It cannot measure and therefore be responsive to the key thing in the Bill: the number of journeys made.
There is a danger that in areas where high-quality, improving services for concessionary bus travel are well promoted, demand will increase much faster and the authorities could be penalised financially. If that were to happen, local authorities would have only two mechanisms for dealing with a shortfall in funding: they could raise council tax or cut local services.
The Opposition made it clear on Second Reading that there is considerable scope for some authorities in so-called hot-spot or honey-pot areas to find themselves heavily out-of-pocket. The funding for the 2006 scheme was shown to be insufficient even when based on relatively static residents over-60 figures. As nationwide eligibility for over-60s is being established in the Bill, the potential for error and for a shortfall in funding to some authorities will be hugely exacerbated.
New clause 5 would oblige the Secretary of State to make an annual statement to Parliament on the total sum of central Government funds made available to local authorities in the previous financial year for the provision of bus services, and the funding of concessions on those services. Moreover, it would oblige him to set out the method by which such funds were made available. That approach has two major advantages. First, it would highlight the continuation of the Government’s tendency to take credit for their policies while passing some, or indeed a substantial amount, of the cost on to local authorities. Given that the doubling of council tax in the past 10 years has hit the elderly and those on low incomes hardest, it is an issue that should concern us all. As my hon. Friend the Member for Epsom and Ewell (Chris Grayling) said on Second Reading:
“There is no point in giving our pensioners free bus travel if they just have to pay the bills through their council tax instead.”—[Official Report, 14 May 2007; Vol. 460, c. 414.]
The annual statement to Parliament would allow local authorities to demonstrate the degree to which the Government are actually providing free bus travel, and the degree to which the Government was making the authorities pay. In short, the new clause would create accountability on whether the Government are providing enough. The Government cannot will the end if they do not will the means. Under the new clause, accountability would be clear.
The second benefit of the new clause is that it would throw some light on the calculations that have resulted in Ministers often telling us that total funding for the implementation of the Bill will be £1 billion. The 2006 scheme was afforded £350 million of Government money; the 2008 scheme will be afforded an extra £250 million. The other £400 million to which the Government refer in its calculation of £1 billion must be and is being provided in myriad guises. Some of those guises such as the bus service operator grant, the rural bus subsidy grant and the block grant, the problems of which I have already explained, are difficult to nail down.
In order that we can be certain that Ministers are being as generous as they claim—I am sure that they are—it is vital that they set out exactly how the sums that they talk about are being distributed. New clause 5 would ensure Government accountability for their actions. Will the Government’s proposed £250 million extra in the first year be enough for the scheme? Will the Government provide enough total funding in successive years, and will they deliver the funds to those who are actually providing the services? New clause 5 is sensible and necessary.
New clause 4 asks for a review of the arrangements for allocating funds necessary for the reimbursement of operators to local authorities. In Lords Committee, the overwhelming view expressed was that of unease. There was also substantial unease among local authorities because of the experience of the previous scheme, and they expected that there would not be enough money for the 2008 scheme and that the money would not be properly targeted to the correct authorities. The new clause deals with that latter aspect of the matter. It would allow for a review of the funding allocation arrangements two years after the commencement of the 2008 scheme.
It will take some time for the true extent of the take-up and cost of concessionary fares to become apparent. It is certain that in the transition and initial take-up period, some authorities will be underfunded. The review would go hand in hand with the annual financial statement established by new clause 5, and it would provide the basis for authorities to appeal against their funding allocation.
The Government may say that the Bill amends section 149 of the Transport Act 2000 to require transport concession authorities to reimburse operators for providing the national concession or for journeys starting in their areas, and that the current legislation requires the operators to be no worse and no better off for carrying concessionaires. It is still not clear, however, that that will be able to take account of hot spots, where journeys start, which exact journeys are the responsibility of particular local authorities and how local authorities will seek compensation from one another.
In the other place, Lord Davies stated:
“We are confident in broad terms that the £1 billion that we
are providing
“will be sufficient to meet all demands”.—[Official Report, House of Lords, 8 January 2007; Vol. 688, c. GC25.]
Funding needs to follow the passenger, and the Government have not yet made it clear exactly how that will happen. The new clauses would provide the mechanism by which to ensure that it is clear that funding is following the passenger and how the allocation of the funding is working. If the Minister shares the confidence of her colleague Lord Davies, she can show that by accepting the new clauses. The clauses are of such importance that although I will listen carefully to the Minister, I intend to press the matter to a Division.

Paul Rowen: As the hon. Member for Tyne Bridge stated earlier, the introduction of the local concessionary bus scheme had a number of unintended results, although some hon. Members warned the Government at the time about what was likely to happen. The use of the block grant and/or the revenue support grant as a mechanism for funding is, as anybody who has been involved in local government will know, a notoriously unreliable and inaccurate means of funding local government for the services that it provides.
The hon. Member for Tyne Bridge spoke about a shortfall of £9 million that affected Tyne and Wear. The London boroughs have estimated that the actual cost to them of the basic concessionary travel scheme was £100 million, yet they received only £53 million. Clearly, there is a huge shortfall. As the hon. Gentleman said, such a shortfall can only be met by increasing council tax or cutting services elsewhere.
All hon. Members support concessionary bus fares, but we want to ensure that the scheme, when operating, delivers what it is said that it will deliver. Anybody using concessionary buses should able to do so without affecting other services. It is clear that where huge numbers of people are travelling to a tourist destination—London, for example, or Blackpool, Scarborough or York—the revenue support grant, which calculates the number of people in the local authority area, is not the best means of delivering a fair recompense for the additional costs.
 If we are to have confidence in the operation of the Bill, full costs have to be reimbursed. I do not wish to see a nationally administered scheme, as has happened in Scotland. The local authorities—the passenger transport authorities—should continue to have discretion to provide additional services or concessions that would not be available under the national scheme. However, the basic scheme must provide full compensation. New clause 2, which is similar to the amendment moved by the hon. Member for Tyne Bridge, ensures that full costs are reimbursed. It will ensure that all the local authorities introducing measures under the Bill can do so while ensuring that other vital services will not be compromised.
New clause 2 also deals with capital costs, which we discussed earlier. The Minister has reassured us, with regard to London, that she will provide a grant to meet the additional capital costs of replacing the Oyster card and the freedom pass for London. We do not know what the total capital cost of introducing the scheme throughout the country will be. The new clause would ensure that there is a contingency scheme, making sure that local authorities and passenger transport authorities can bid into that concession for the costs that they have incurred. I hope that the Minister can provide some reassurance about those issues, because although we know that there will be increased usage, we cannot predict what it will be. We need to ensure that local authorities, and particularly those where there are tourist destinations, are fully recompensed for the costs that they incur.
On Second Reading, I asked the Secretary of State whether he would be willing to meet a cross-party group of local authorities affected by this scheme. There is huge concern about what the additional cost will be in, for example, London and Blackpool, because there are no figures on how many 60-year-olds visit those destinations. I therefore fail to see how the Minister can give an assurance that the full costs of the scheme will be reimbursed to the local authorities affected. That can be done retrospectively, by putting a commitment in the Bill to reimburse the full costs. Relying on the block grant will once again ensure that there are winners and losers, and I suspect that this time round there might be more winners than losers.

Tom Levitt: I am grateful to you for calling me, Mr. Bayley. The county council in Derbyshire has implemented the existing scheme to a greater extent than required by its minimum legal responsibility, in that the scheme is available during the evening rush hour as well as throughout the rest of the day from 9.30 am onwards. However, we have experienced a problem recently, which I hope my hon. Friend the Minister will address, about the way in which the bus companies are claiming back money from the local authority. That has meant that the half-price scheme, which previously ran before 9.30 am, can no longer be operated. It appears to many that the bus companies have, in effect, put a stranglehold on the local authority, by insisting on a greater level of payment—a couple of million pounds is being talked about—in order to continue to provide the above-minimum scheme upon which Derbyshire has embarked.
My question, which relates to the reimbursement of operators, is this: can we make absolutely clear the basis on which the reimbursement takes place in order not to have bus companies making extreme or exorbitant demands on local authorities? In the Derbyshire case, those demands have resulted in a lessening of the service that was previously available, albeit not in the concessionary fares window from 9.30 in the morning onwards, but in the concessionary fare scheme that operated before 9.30, which is no longer possible because of the bus companies’ demands on the local authority.

Gillian Merron: We return in this clause to the important issue of funding for local authorities. I am happy to tell the Committee that I agree with the sentiment that local authorities should be adequately funded by central Government for the costs to them of administering a mandatory concession. After all, it is Government policy to fund new statutory burdens fully. However, I say at the outset that it is in all our interests to get things right. There is no underhand plan to try to deprive anybody. The scheme is popular and will benefit 11 million people, and we want to get it right. I can confirm to the Committee that that is why we are paying so much attention to it.
The Government are providing up to an extra £250 million of funding a year for the new concession. The hon. Member for Wimbledon asked for a calculation of the £1 billion a year. I confirm that the figure for getting to the full-fare national scheme is £250 million, which is new money for 2008, and that the figure for moving up to the full-fare local scheme was £420 million, while the figure for moving to the initial scheme—that is, the half-fare local scheme—was £400 million. I hope that that is helpful but, as I have said, I am always happy to provide any further information.
I am confident that the £1 billion will be sufficient. There is indeed no mention of the funding of concessionary travel in the Bill, but for good reasons. Circumstances change, and flexibility needs to be built into the legislation to enable future improvements to concessionary travel to be made as efficiently and effectively as possible. It would be neither appropriate nor wise to lock ourselves into a particular approach now, when the important issue of funding is being considered and discussed across government and beyond.
Amendment No. 20 and new clause 2 propose a direct annual revenue grant to fund authorities. It is important to recognise that the freedom and flexibilities provided by the unhypothecated formula grant are generally supported by local authorities. Indeed, local authorities have long argued against having their hands tied by hypothecated funding schemes, and if I did not listen to them, I am sure that hon. Members would be the first to criticise me.
 Concessionary fares reimbursement is only one of the many obligations that authorities must meet from their council tax receipts and from the funding provided by central Government through the formula grant process. I am aware that the Local Government Association strongly supports a specific grant for the extra funding for the national bus concession, at least temporarily. We are considering the merits of temporarily distributing the extra money through an unhypothecated specific grant. We need to be clear, however, that such a move would break from the policy of greater freedom and flexibility in funding, which is generally welcomed by the local government community.
I assure hon. Members that we continue to talk to the LGA and to the concessionary fares working group, which consists of representatives of all tiers of local government, about methods of distributing the extra money, including the option of a specific grant. I hope that that reassures the hon. Member for Rochdale about the level of consultation that we are undertaking in addition to the regional roadshows, nine of which have been held around the country in recent weeks, to talk directly to local people.
New clause 2 would require all the funding for the statutory concession to be distributed by direct annual grant, which would mean that existing funding for concessionary fares would have to be extracted from the formula grant system. I am not sure whether that is the intention of the new clause, as there is little support for such an approach. Moreover, the LGA and our concessionary fares working group support the idea of the current funding staying in the formula grant. They are all too well aware of the council tax turbulence and fiscal uncertainty that would result from the transfer of existing funding from the formula to a specific grant. With great respect to hon. Members, I can see little point in introducing something that local authorities do not want.
The Treasury, the Department for Transport and the Department for Communities and Local Government are carefully considering the merits of different funding mechanisms for statutory concessions. We are aware of the feedback from our working group. I referred earlier to the nine regional roadshows that my officials recently completed, to which all local authorities were invited. I assure my hon. Friend the Member for Tyne Bridge that Nexus representatives were present, and I am sure that he will wish to speak to them about how useful it was. According to the feedback that I have had, it was extremely valuable.
It is important that we get our approach right. We will continue to talk to interested parties in the coming weeks before coming to a view on the mechanism for the extra funding. The new clause is misplaced. If we decide that a specific grant is the right option, we will formally consult local authorities on the formula for distributing the specific grant. In any case, there is no need for the Bill to oblige the Secretary of State to fund concessionary travel as proposed by the new clause. The Secretary of State already has the power to fund local authorities for concessionary fares by direct grant, if he wishes. It would be inappropriate to require the use of such a funding mechanism in perpetuity without consulting all those with an interest.
The hon. Member for Rochdale expressed his dislike of funding for concessionary fares coming from revenue support grants, but local authorities have long argued for non-ring-fenced, single-pot funding. That is what the Government have provided, and that approach has been generally welcomed. New clause 2 would specify that a contingency fund be set up. The extra funding of up to £250 million a year for the national bus concession is based on a number of key assumptions, which include the generation of an extra 100 million journeys and a pass take-up of 85 per cent. Those are generous assumptions, because in some regions of England, pass take-up is less than 60 per cent. The £250 million figure also includes a contingency allowance to recognise the difficulties of allocating money on a formula basis. We are confident that the extra funding is sufficient to cover the extra costs to local authorities.
The hon. Member for Wimbledon raised the point that he was concerned about demand increases leading to higher costs and fare increases. I reiterate that the extra funding includes moneys to address uncertainties, and we have taken into account fare inflation in our calculation.
We are also sensitive to the issue of set-up costs. Earlier in Committee, we said that we would provide extra funding in addition to the extra £250 million a year to pay for the extra costs associated with implementation, such as the issuing of new passes. We are discussing the figures and the mechanics with the LGA and the concessionary fares working group.
 In addition, proposed new subsection 149A(2) in new clause 2 proposes that a contingency fund be established to fund any unforeseen costs of the mandatory concession. Again, as previously, I am sure that the amendment is well intended. However, it is not practical or proportionate. How do we define unforeseen costs? That is a rather tricky task that will create its own bureaucracy, because every local authority will be incentivised to make a claim and there will be no balancing provision that such claims must be reasonable. The amendment erodes the incentives for local authorities to negotiate cost-effective schemes with operators and to manage overall costs effectively. That has happened in Wales, where local authorities pass on the full cost of their schemes to the Welsh Assembly. As a consequence, the total cost of the Welsh national scheme has been increasing significantly year on year. I am sure that the Committee will agree that we cannot sanction such an approach.
The existing arrangements contain appropriate checks and balances to ensure that public funds are spent wisely. They include an incentive for local authorities to reimburse cost-effectively by a fair amount and a right of appeal for any operator that believes it has been disadvantaged. Although the system is not perfect, it is fair to the taxpayer and operator alike.
The proposal for guaranteed funding carries with it the risk of unnecessary expenditure incurred by local authorities and bus operators going beyond what is fit for purpose. It is crucial that we get a good deal for the taxpayer. Giving an unconditional commitment, as requested, to fund any cost does not provide that. As I have said, extra funding already includes a contingency.
 The same arguments apply to amendment No. 6, which specifies that the Secretary of State must reimburse local authorities when they incur a deficit of more than £500,000 as a result of reimbursing individual operators. Under section 31 of the Local Government Act 2003, the Secretary of State already has the power, with the consent of the Treasury, to make grants to local authorities to cover their expenses. Therefore, the amendment would add little. In addition, I do not find it helpful to introduce arbitrary thresholds with the potential to distort local negotiations.
New clause 4 proposes yet another review—in this case of the funding arrangements for local authorities. As the Committee has heard, we have embarked on a great deal of consultation with local authorities and other interested parties about all the issues surrounding the implementation of the national bus concession. We will continue fully to consult local authorities in line with existing statutory requirements. The Department for Communities and Local Government already has in place a well established annual process for consulting local authorities, both informally and formally, about the formula grant distribution. I see little to be gained from adopting this amendment.
New clause 5 proposes that the Secretary of State makes a statement every financial year about the amount that is made available to local authorities and the method of distribution. Again, I see little benefit from that. There is already the yearly local government finance settlement that sets out central Government’s funding of local authorities. That settlement does not, and cannot, earmark different sums for different purposes for the very good reason that the funding is not hypothecated. That is generally welcomed by local government, because it makes it clear that local government is responsible for choices on local spending priorities.
Referring to the comments made by my hon. Friend the Member for Tyne Bridge, there was indeed a problem in Tyne and Wear in respect of Nexus, which I was very glad to meet in recent months. Following consultation, the formula grant was adjusted to reflect support for disabled people and the needs of areas in which the take-up is likely to be high. That benefited not only Tyne and Wear, but all areas that had a higher than average number of residents who were disabled. The measure reduced the shortfall by about £7 million.
I would also make the point that extra funding was given to the metro to reflect the unique circumstances in Tyne and Wear. £1.7 million was made available last year, and also this financial year, to cover the financial impact on the metro.
With all of those points in mind, I hope that hon. Members will agree with me that the amendments are unnecessary and that the lead amendment will be withdrawn.

David Clelland: I listened with interest to what the Minister had to say. I readily acknowledge the support that Tyne and Wear has had from the Department for Transport to enable it to extend the free travel service to the metro system, and we are very grateful for that. Nevertheless, the shortfall was as it was, regardless of all the efforts that were made by the Minister and others in the interim. I heard what the Minister said about the flexibility in the Bill and the fact that funding mechanisms are still being discussed. I was particularly interested to hear that she believes that amendment No. 6 is unnecessary because the Secretary of State already has that power, and I look forward to his exercising it to deal with those losses at Tyne and Wear. Perhaps between now and Report, we may be able to have some serious discussions as to how that might be done. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.
Further consideration adjourned—[Mr. Roy.]

Adjourned accordingly at four minutes to One o’clock till this day at Four o’clock.